Pennsylvania Pushes Back on Federal Medicaid Fraud Scrutiny

What happened:  As the White House audit of state Medicaid Fraud Control Units intensified nationally, Pennsylvania officials went on offense this week, presenting their anti-fraud track record to a panel of state House Democrats in Philadelphia. Department of Human Services Secretary Val Arkoosh and Inspector General Michelle Henry outlined the commonwealth’s prevention-first approach: individual applications are screened against 15 databases, roughly 20,000 of 3.3 million annual applications or redeterminations are referred to the Inspector General’s office, and the office pursued 674 cases worth $179 million in the past year. A federal report from last year ranked Pennsylvania’s Medicaid Fraud Control Unit — operating under Attorney General Dave Sunday — first in the nation for criminal convictions and third for charges filed. 

Why it matters for nonprofits:  The administration’s nationwide fraud audit (covered in last week’s memo) has created compliance pressure across the sector. Pennsylvania’s strong anti-fraud record provides some buffer, but both officials warned that federal work requirements and more frequent eligibility redeterminations — set to take effect in 2027 under H.R. 1 — could strain state systems significantly, estimating $50 million in technology costs and the need for roughly 250 additional staff. Both officials also noted that most Medicaid fraud originates from providers rather than individual recipients — meaning nonprofits operating as Medicaid providers remain in the crosshairs of both federal and state oversight. 

One item to watch:  A state False Claims Act — which would incentivize whistleblower reporting by offering a share of recovered funds — remains stalled in the Senate despite bipartisan support and House passage last July. Given the federal administration’s push on anti-fraud enforcement, this bill may gain new momentum. PANO will monitor its progress. 

Where things stand:  Pennsylvania has not been cited in the federal audit. PANO will continue tracking federal enforcement activity and its implications for nonprofits providing Medicaid-funded services.